On June 23, 1999, the Mayor and City Commission adopted Resolution No. 99-23222 approving the development agreement with 16th Street Partners, LLC, a Florida limited liability company, to create a mixed-use project on land leased from the City located at Washington Avenue and 16th Street (the “Project”). In connection with said development agreement, on September 1, 1999, the City entered into a Ground Lease Agreement (“Ground Lease”) with 16th Street Partners, LLC (a joint venture comprised of Comras 16th Street, Inc. and LNR 16th Street, Inc.) for the development of an eight-story, high-rise building with approximately 105,652 rentable square feet of office space, 28,483 rentable square feet of retail space and a 493 space parking garage, commonly referred to as the “Lincoln Place”.

On May 24, 2006, 16th Street Partners, LLC entered into an Assignment and Assumption of Lessee’s Interest in Ground Lease Agreement with TAG Lincoln Place LLC (“TAG”), a wholly owned subsidiary of The Andalex Group, LLC.

On December 6, 2013, Andalex Holdings LLC, through the sale of its 100% ownership of TAG membership, sold such membership interests to PKY Lincoln Place Holdings, LLC. Subsequent to said sale of membership interests, TAG changed its name to PKY Lincoln Place, LLC (“PKY”).

The ultimate owner of PKY, an entity named Parkway Properties, Inc., a Maryland corporation (“Parkway”) merged with Cousins Properties Inc., a Georgia corporation (“Cousins”). On September 14, 2016, the Mayor and City Commission adopted Resolution No. 2016-29571, approving the sale of the Project by merger. Pursuant to the merger, PKY assigned 100% of its interest to Cousins Lincoln Place Holdings. Thereafter, PKY changed its name to Cousins Lincoln Place, LLC.

On December 23, 2016, 16th Street Partners LLC,  transferred its leasehold interest to a permitted buyer as tenants in common to: (i) NG 1601 Washington Ave. LLC (as to an 87.20% tenant in common interest), indirectly controlled by the Nightingale Group, LLC; (ii) JBL 1601 Washington, LLC,  (as to an 8.86% tenant in common interest); and (iii) Review Avenue Miami LLC (as to a 3.94% tenant in common interest), (collectively, “Tenant”).

The Ground Lease has an initial term of 50 years, expiring September 30, 2052, plus two automatic renewal options for 20 years each, unless the Tenant is in default or notifies the City within the last twenty-four (24) months of the end of the term in question, indicated they will not exercise their option.

On July 21, 2023, the City received an Offer Notice pursuant to Section 36.2(a) of the Lease, notifying the City that Tenant desires to sell its leasehold interest in the Premises.

Pursuant to Section 36.2(b) of the Lease, Tenant will not consummate any offer from a third party to purchase the Tenant’s interest in the Premises (“Right of First Offer Transaction”), within one hundred eighty (180) days following the earlier to occur of (i) the expiration of forty-five (45) days following Owner’s receipt of this Offer Notice, or (ii) receipt by Tenant of a notice by Owner declining to consummate the Right of First Offer Transaction.

The Offer Notice contained the following information:

Owner of Ground Lease:        City of Miami Beach

Seller:                                      NG 1601 Washington Ave LLC,

                                                A Delaware limited liability company

                                                JBL 1601 Washington LLC,

                                                A Delaware limited liability company

                                                Review Avenue Miami, LLC,

                                                A Delaware limited liability company

Purchase Price:                      $82,000,000.00

In accordance with Article 36.2 of the Lease, “Owner’s Reciprocal Right of First Refusal”, the City also has the right to elect, in writing, whether to consummate the Right of First Offer Transaction, at the same price upon such other material terms set forth in the Offer Notice (“Offer”).

Considering that the Offer materially exceeds the cost to construct a City-owned parking, office, and retail facility and that the Project will revert to the City at the end of the Lease term, the City Manager recommends that the City decline the Right of First Offer Transaction.

Following the City’s rejection of the Right of First Offer Transaction, pursuant to Section 10.5 (“Required Notices”) of the Lease, the proposed transfer and/or sale of the Project requires written notice to the City, as Owner, with the identity of the transferor, transferee, nature of the transaction, percentage of interest conveyed, and such other information requested by the City (“Notice of Sale”). The City will have sixty (60) days from receipt of the Notice of Sale to consent to the sale. Following receipt of the Notice of Sale, the City Administration will submit the proposed sale of the Project for approval by the City Commission, subject to the City Administration conducting its due diligence, at the sole expense of Tenant, to investigate whether or not the proposed purchaser qualifies as a “Permitted Buyer” under Section 10.3 of the Lease.

Based upon the foregoing, the City Manager recommends that the Mayor and City Commission adopt the Resolution approving and authorizing the City Manager to decline, in writing, the Owner’s Right of First Refusal, relating to the purchase of Lincoln Place for the total sales price of $82,000,000.00, as required pursuant to the terms of Article 36.2 of the Agreement.